Aug. 10 (Bloomberg) -- Finnair Oyj, Finland’s biggest airline, rose the most in a year as its second-quarter loss narrowed and the company deepened a cost-cutting plan.
Shares of Finnair rose as much as 8.9 percent in Helsinki, the biggest intraday gain for exactly 12 months, after the Vantaa-based carrier reported a net loss of 19.9 million euros ($24 million), down from 23.1 million euros a year earlier.
Finnair, which has established Helsinki as a hub for travel from Europe to China, Japan and Korea, lifted passenger numbers almost 11 percent in the quarter. A plan to shave 140 million euros from costs has gained ground with an agreement to cut 100 cabin-crew jobs, and more positions could go, Chief Executive Officer Mika Vehvilainen said in a telephone interview.
“Travel has been better than anticipated, with strong leisure traffic,” Vehvilainen said. “I’m also very happy that some of the major structural changes that we’ve talked about have reached a conclusion.”
Finnair, which hasn’t posted an annual profit since 2007, was trading 4.9 percent higher at 2.13 euros as of 11:14 a.m. in Helsinki, paring the decline this year to 7.4 percent and valuing the company at 273 million euros.
“Traffic performance is quite good,” said Jaakko Tyrvainen, an analyst at Fim Bank Ltd. in Helsinki who recommends that investors buy Finnair shares. “This is promising for the second half of the year, which traditionally is better for Finnair.”
While the company is still seeking a joint venture spanning the Nordic region that would help bring down costs in the short-haul network, it’s currently “taking a breather” after talks failed to deliver “an optimal solution,” Vehvilainen said.
“We’re working on it but I can’t promise we’ll reach a solution soon,” he said. “We’re keeping our channels and contacts open but there are no active negotiations as we speak.”
The CEO declined to say to which airlines Finnair has been talking, while specifying that Stockholm-based SAS Group and Norwegian Air Shuttle AS haven’t been part of the discussions. The company could also confront short-haul costs through “internal measures,” he said, while declining to elaborate.
Corporate-travel demand represents the chief uncertainty for Finnair in the second half, Vehvilainen said, adding that it has been declining for years and were it not for growth markets in Asia the carrier might not offer business seats at all. The company is always examining new routes to the east, he said.
The euro’s weakness against the dollar has increased costs, the CEO said, though it has also encouraged travel to Europe.
Analysts had predicted a quarterly loss of 4.33 million euros, the average of three estimates in a Bloomberg survey.
Finnair, a member of the British Airways-led Oneworld alliance, already has an agreement with Flybe Group Plc, according to which the Exeter, England-based company operates regional flights representing one-third of European services.
Flybe shares fell as much as 16 percent today after it said full-year sales will grow no more than 2 percent, less than previously predicted, clipped by a sluggish European economy and disruption from the Jubilee celebrations and 2012 Olympics.
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